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Welcome to Platform Thinking!
Before you start, the very first thing you MUST do is get a copy of the ebook Platform Power, that puts together the key concepts of Platform Thinking together by bringing together the top posts from the blog in a tight narrative. Get your FREE copy right here.
Now, let’s talk about change. The world is changing. Systems are organized around models of dissemination of information. For much of the industrial age, information was disseminated in hierarchies and our organization structures as well as business flows represented that.
In the networked age, information is organized on a network. This calls for a new model of business (and society).
We need a new model for thinking in a world of Networks.
The basis of competition, also, is shifting from creation of products leveraging a supply chain to the architecting of an ecosystem of players around a platform.
This is what Platform Thinking is all about.
Apple disrupted the mobile industry by creating a platform for developers to create and deliver applications to consumers at a time when the carrier and handset industry was focused on product (The phone). YouTube disrupted online video by creating a platform for content when other video players were focusing on the product itself (busy striking content deals). AirBnB, KickStarter, Quora, Facebook, Twitter, LinkedIn are companies that have gained traction and grown thanks to platform thinking.
Platform Thinking is the activity of designing, planning and organizing the various components of an internet business. It is often believed that technology is the central component of an internet business. However, it is only one of the many components.
The key components in an internet business are:
1. Participants (producers/consumers),
2. Infrastructure (tech),
3. Interactions (between producers and consumers, that creates value) and
4. Data (that matches producers and consumers)
Platform Thinking is an approach to designing and organizing all four components in a manner that maximizes the value created by the platform and improves the efficiency of interactions between producers and consumers.
Platforms facilitate interactions between producers and consumers by bringing the two together, providing them the tools to interact and matching supply and demand. YouTube brings video creators and viewers together. KickStarter brings those seeking funding together with investors. eBay brings buyers and sellers together and facilitates transactions. Quora helps users interact to ask and answer questions. In all these cases, we see the power of platforms to:
1) Enable users to create value and
2) Match supply and demand
This, of course, comes at a cost. Since users create the bulk of value on these platforms, they suffer from a chicken and egg problem. WIthout users, there’s no value and without value, users just won’t show up. That, very often, is the first problem that platforms need to solve. Once solved, network effects (more users = more value = still more users) propel the platform forward.
This blog talks about all the above phenomenon and seeks to lay out a model of thinking to help businesses move to a platform model.
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